Published July 2005, 78 pages, ISBN: 2-86978-158-X
This study assesses the potential impacts of a New Global Financial Architecture (NGFA) on poor countries and poor people. Put forth largely by the group of most industrialized
countries and the Bretton Woods Institutions, NGFA is rooted in the neo-Walrasian, market fundamentalist view of the world, with the obvious consequence of increasing the vulnerabilities of small and poorer developing countries to frequent financial crises. The study argues that the claim of this model that global growth and equity would be 'best' served by deeper
financial integration through open capital accounts is founded on shaky theoretical and empirical grounds. The model of premature and complete liberalization of the capital account in the context of endemic poverty, under developed and weak markets and institutions, and little or no formal social safety nets, is shown to exacerbate the vulnerability of small open
(especially low-income) economies to disruptive and costly crises without any tangible benefits. Over time, this exposure could be growth retarding, as the devastating effects of shocks can be permanent especially on the poor. It threatens to confine deepening poverty and destitution in certain geographic boundaries and prosperity in others, leading to an ever widening
gap between rich and poor countries and peoples.
Charles Soludo is currently Governor of the Central Bank of Nigeria. Prior to which he was a senior lecturer in the Department of Economics at the University of Nigeria in Nsukka, Nigeria. Dr Soludo is a member of the governing council of the
Nigerian Economic Society.
Musunuru Rao is an adviser to several leading international development organizations and institutions. He is Senior Vice President, KCP Associates International.
Contents
| Summary | v |
|
1. Introduction | 1 |
| 2.
Rationale and Overview of the New Global Financial Architecture | 4 |
| Rationale |
4 |
| Objective | 5 |
| Main
Elements of the NGFA | 5 |
| Assessment | 7 |
| Standards, Codes, Principles and Regulations | 8 |
| Provisions Targeting Developing Countries and Poor
People | 10 |
| 3. Disputing the Framework of the New Architecture |
12 |
| Underlying Development Model | 12 |
|
Critique of the Model | 15 |
| Global Financial Governance | 19 |
| Critique of the NGFA Framework | 20 |
| 4. Evaluating the Potential Impacts |
25 |
| Potential Impacts on Developing Countries | 25 |
| Specific Impacts on Poor Countries | 27 |
| 5. Towards
an Inclusive Architecture | 37 |
| People, Poverty and the NGFA | 37 |
| Some Elements of an Inclusive NGFA | 37 |
| Reconciling Wall Street with
Copenhagen (or Main Street) | 38 |
| Participation: Whose Architecture? | 41 |
| Some Issues Relevant to Poor Countries | 42 |
| Conclusions |
52 |
| References | 57 |
|
Appendix Tables | 60 |
| Annexes | |
ISBN: 2-86978-158-X Africa: US$10.00, 5000CFA; Elsewhere: £10.00 /$15.00
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